Making the World Safe for China

China succeeds by behaving more like a multinational company than a global superpower.

In April, the Chinese navy abruptly deployed 10 warships near the Japanese coast and sent helicopters to buzz Japanese ships. In July, the Chinese foreign minister angrily asserted his country's claim to international waters in the South China Sea, along with some islands claimed by others. Earlier this month, a Chinese fishing trawler smashed into two Japanese coastguard boats, possibly on purpose, leading to a Japanese arrest and a furious reaction from Beijing.

Throw in a few rhetorical outbursts—the Chinese U.N. official who ranted a couple of weeks ago about not liking Americans—and it does seem as if Chinese military, territorial, and diplomatic aggression is rising. It is an extraordinary development, largely because, from China's point of view, it doesn't make sense. Why on earth should China shout, bully, and push its neighbors around? Over the last decade, China has kept silent, lain low, and behaved more like a multinational company than a global superpower—and garnered enormous political influence as a result.

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Look around the world, and the fruits of this success are everywhere. Look at Afghanistan, for example, where U.S. troops have been fighting for nearly a decade, where billions of dollars of American aid money has been spent—and where a Chinese company has won the rights to exploit one of the world's largest copper deposits. Though American troops don't protect the miners directly, Afghan troops, trained and armed by Americans, do. And although the mine is still in its early phases, the Chinese businessmen and engineers—wearing civilian clothes, offering jobs—are already more popular with the locals than the U.S. military, which carries guns and talks security. The Chinese paid a high price for their copper-mining rights and took a huge risk. But if it pays off, our war against the Taliban might someday be remembered as the war that paved the way for Chinese domination of Afghanistan.

America fights, in other words, while China does business, and not only in Afghanistan. In Iraq, where U.S. troops brought down a dictator and are still fighting an insurgency, Chinese oil companies have acquired bigger stakes in the oil business than their American counterparts. In Pakistan, where billions in U.S. military aid helps the government keep the Taliban at bay, China has set up a free-trade area and is investing heavily in energy and ports.

China has found it lucrative to stay out of other international debates as well. Americans, along with Western Europeans, are pouring vast amounts of public and private money into solar energy and windpower, hoping to wean themselves off fossil fuels and prevent climate change. China, by contrast, builds a new coal-fired plant every 10 days or so. While thus producing ever more greenhouse gases in the East, China makes clever use of those government subsidies in the West: Three Chinese companies now rank among the top 10 producers of wind turbines in the world.

The Chinese have also quietly cornered the market in rare-earth elements, unusual minerals with lovely names (promethium, ytterbium) that are utterly vital for the production of cellphones, lasers, and computers—not to mention hybrid cars, solar panels, and wind turbines. Although China doesn't control the world's reserves of these elements, some of which aren't all that rare, mining them is dirty, labor-intensive, and ideally suited for cheap production in a country with low wages and lower environmental standards. Nobody else can compete, which is why China now controls 99 percent of the world's supply of some of these elements.

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Of course if they are so inclined, their monopoly could be used to raise the prices of solar panels and cellphones—and not only that. Last week, the Japanese reported that China had stopped shipping rare-earth minerals to Japan in retaliation for the Japanese arrest of that Chinese fisherman. The glitch in supplies now appears to have been connected to a Chinese holiday—or that's what the Chinese are saying—but markets and pundits sounded belated alarm bells nevertheless.

Which brings me back to my original point: Why on earth are the Chinese playing military games with Japan, threatening Southeast Asia, or entering politics at all? When they stay silent, we ignore them. When they threaten boycotts or use nationalist language, we get scared and react. We still haven't realized that the scariest thing about China is not the size of its navy or the arrogance of its diplomats. The scariest thing is the power China has already accumulated without ever deploying its military or its diplomats at all.